It was a ho-hum trading day as investors sat on the sidelines awaiting more earnings reports and economic indicators that are due. A revenue warning from Adobe (read more below) helped dampen any potential for a rally that started with some early morning gains. Donit look for any of that to change any time soon, either. From a Reuters report:
"We are very rangebound until we get some significant good news," said Arthur Hogan, chief market analyst at Jefferies & Co.
In the meanwhile, even as Wall Street has been dancing the Limbo and chanting "how low can you go?" declines in stock prices still havenit been enough to bring some economic reality to the S&P. Some analysts have noted that the S&Pis P/E ratio has actually increased even as the value of the index itself has declined. From a CBS Marketwatch report:
It seems that no matter how much the S&P 500 drops, it canit keep pace with the decline in corporate earnings. As a result, the current price-to-earnings ratio for the S&P is around 29.9, compared to the 27.1 of June and the 24.8 of the first six months of the year," Rao said in a research note.
The economist notes that the S&Pis P/E is currently hovering around levels not seen since last year despite the fact that the broad market gauge is down by almost 20 percent from a year ago. "Unless stock prices continue to fall, equities will remain richly-valued, for there is little evidence of an upturn in earnings At their current ratio, stocks remain expensive even by the less-than-strict standards of the 1990s," Rao concluded.
The Dow and the Nasdaq traded in light volume as both moved slightly lower. Ho-hum.
Industry News
Microsoft is reportedly "determined" to keep AOL from buying AT&Tis cable operations. AT&T had been set to sell its cable operations to Comcast, but AT&Tis board of directors gave a thumbs down to that US$58 billion deal. AOL/Time Warner then threw its hat into the ring, and in a bit of try-and-sic-the-DOJ-on-us-for-XP-will-you?, Microsoft is reportedly putting its efforts into getting other potential suitors into the bidding in an all out effort to keep AOL/Time Warner for making this acquisition. From a Reuters report:
"I predict that we are going to see all-out war for several years before we see cooler heads prevail," said David Smith, an analyst with Gartner Group, a technology consultancy.
"I have no doubt that AOL wants to be the next Microsoft," said Jeff Chester, executive director of the Center for Digital Democracy, a consumer advocacy group. "Steve Case is looking at the mirror and he sees himself as Bill Gates."
AOL/Time Warner would own a huge chunk of the dial-up and broad band market with AT&Tis cable operations included in their portfolio.
Speaking of that Microsoft break up, CBS Marketwatch has a dandy piece that says that it is still a very good possibility. Quoting such conservative legal luminaries as Kenneth Starr and Robert Bork, the article lays out the various possibilities at hand.
Microsoft is also in the news today for a PC virus. We know, take a moment to get over your shock before reading further. The virus has been dubbed Code Red and might bring Internet traffic to a crawl tomorrow. The virus can infect Windows NT and Windows 2000 servers running Microsoft IIS 4.0 and 5.0. There is a patch available, but unpatched systems are vulnerable. From a Reuters report:
"This uncontrolled growth in scanning directly decreases the speed of the Internet and can cause sporadic but widespread outages among all types of systems," the online security watchers said in a joint statement.
The version of Code Red that could hit on Tuesday "has mutated so that it may be even more dangerous," the statement warned. "This spread has the potential to disrupt business and personal use of the Internet for applications such as electronic commerce, e-mail and entertainment."
Apple Industry News
Adobe announced that it expects to meet profit forecasts, it may not hit revenue forecasts. From a Reuters report:
The San Jose, California-based maker of Acrobat -- the popular online document-sharing software -- said that after a iisolidii June, U.S. revenue was weaker than expected in July, and Japanese revenue in July fell more than its reduced expectations. Adobe said revenue from Europe, which began slowing in April, stabilized during the first two months of the quarter.
Adobe dumped more than 5.8% of its value today in triple the normal volume to close down 2.52.
Apple began the day just above Fridayis closes and played around that level until it took a 50 cent drop in mid-morning trading. The stock clawed its way back into positive territory, only to lose ground again in the last 30 minutes of trading. A last second rally helped bring the stock to within 3 cents of Fridayis close. Volume was light, and the dayis trading range was 18.51 - 19.36.
Apple closed at 18.93, down 3 cents (-0.16%), on light volume of 4,345,700 shares trading hands.
The Nasdaq closed at 2017.84, off by 11.23 (-0.55%), on volume of 1,339,153,000 trading hands.
The Dow closed at 10401.72, down 14.95 (-0.14%), on volume of 907,551,000 trading hands.
The S&P 500 closed at 1204.52, down 1.30 (-0.11%).
Adobe closed at 40.54, down 2.52 (-5.85%), on heavy volume of 11,090,000 shares trading hands.
Akamai closed at 7.60, down 0.41 (-5.12%), on very light volume of 579,300 shares trading hands. Apple is a large shareholder of Akamai.
Earthlink closed at 16.91, down 0.44 (-2.54%), on light volume of 1,206,100 shares trading hands.
IBM closed at 105.85, up 1.15 (+1.10%), on light volume of 4,030,800 shares trading hands.
Macromedia closed at 17.04, up 0.24 (+1.43%), on light volume of 719,300 shares trading hands.
Motorola closed at 19.03, up 0.03 (+0.16%), on strong volume of 12,112,100 shares trading hands. Motorola manufactures the processors used in Appleis Macintosh line.
Dell closed at 27.46, as unchanged as their industrial design, on volume of 24,316,900 shares trading hands.
Gateway closed at 9.93, down 0.27 (-2.65%), on volume of 1,766,100 shares trading hands.
Intel closed at 29.04, down 0.18 (-0.62%), on light volume of 30,515,300 shares trading hands.
Microsoft closed at 65.80, up 0.33 (+0.50%), on light volume of 21,098,300 shares trading hands.
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